AMC Entertainment Holdings Inc (NYSE: AMC) has been a hot topic of discussion in the investing community for several months at this point after members of the Wall Street Bets Reddit put the stock on the map with a big short squeeze.
Now, the stock is ticking up yet again.
This time, investors are looking toward a COVID-19 recovery, and a statement made by the CEO of the company that shows there’s more financial strength here than most likely think. Here’s what’s going on:
AMC To Benefit From COVID-19 Recovery
There’s no question that movie theaters have had a hard time over the past year. With the COVID-19 pandemic leading to closures across the United States, these companies have been dealing with a painful reality.
However, AMC is working to make a recovery. In mid-march, the company promised to have 98% of its locations open to the public by March 19, 2020. That has happened and consumers are making their way back into theaters across the country.
That’s great news as the company is now working to get back into the swing of things, and that’s exciting. However, it’s not the most exciting thing I’ve heard of the company as of late. In fact, just this morning, I came across something that sets the stage for tremendous growth ahead.
AMC Doesn’t Need A Fund Raise
Recently, there has been quite a bit of discussion about the financial stability at AMC. The company has dealt with closing its locations across the United States and slow reopenings. A huge question among investors for some time has been whether or not the company could survive the pandemic financially.
Now, it seems as though that may not be a question at all.
Recently, AMC asked investors to vote in favor of giving it the ability to issue 500 million new shares. The fear here was that the company would quickly unload these shares in the market to build its balance sheet back to health.
That’s not going to happen. At least not any time soon.
In a recent video, one that’s being shared all over the Wall Street Bets platform, the CEO of AMC said that if shareholders approve the issuance of these new shares, the company will not sell a single share in calendar 2021.
That’s a major statement.
Saying that even if it has the option to sell shares, it’s not going to in this calendar year, suggests that AMC is in a stronger financial position than once thought.
Is Another Short Squeeze Coming?
There’s a good chance that another short squeeze is on the horizon. Ultimately, the Wall Street Bets Redditors are all over the stock again, and we’ve seen in the past what they’re capable of doing when they band together.
At the same time, the short volume on the stock floats around 20%, which is overwhelmingly high.
Should retail investors pull together yet again, they could easily squeeze the hedge funds and other shorts out of their positions, sending the stock screaming for the top, and I’d be surprised if that didn’t happen relatively soon.
The Bottom Line
The bottom line here is simple. AMC has reopened the vast majority of its theaters and is making a strong recovery from the COVID-19 pandemic. At the same time, the company has promised not to sell a single share, meaning that it’s confident in the financial stability it has achieved, all while it trades with heavy short interest. So, there’s both, a long term opportunity in the fact that the company is likely to recover quickly, and a short term opportunity in the fact that the stock is setting up for yet another big short squeeze. So, if you’re not paying attention to AMC stock yet, you’re missing out.